WeightWatchers cuts the fat—Files Chapter 11 bankruptcy to eliminate $1.15 billion debt

Weight Watchers, the 62-year-old health and wellness company that shaped how millions of people approach diet and exercise, filed for Chapter 11 bankruptcy on Tuesday in an effort to reduce its debt by more than $1 billion, according to The New York Times. The report stated how the company plans to continue operating while it expands its telehealth business. Under the bankruptcy plan filed in Delaware, Weight Watchers will be taken over by a group of investors while existing shareholders will retain a 9 percent stake once the process is completed in about 45 days. 

The company has struggled to maintain its customer base as people increasingly turn to weight-loss medications, fitness apps, and social media influencers for guidance. "These changes will give us the flexibility to accelerate innovation, reinvest in our members, and lead with authority in a rapidly evolving weight management landscape," Tara Comonte, Weight Watchers' chief executive, said in a statement to the New York Times. Founded in New York City by Jean Nidetch, who had lost 72 pounds by following a strict diet with support from friends, Weight Watchers initially charged dieters to attend periodic meetings where they tracked their food intake and motivated each other.

The bankruptcy filing comes as the company's services for members will continue uninterrupted, CBS News reports in its coverage of the development that marks a significant turning point for a weight loss program with a history spanning over six decades. Weight Watchers has evolved considerably from its origins, adding exercise regimens and a point system for quantifying appropriate food portions, and in recent years shifting to digital offerings through its mobile app and website. 

The company has faced several challenges in recent years, including a $1.5 million penalty in 2022 as part of a settlement with the Federal Trade Commission, which had alleged that its weight-loss app for children illegally collected personal information from minors. According to CBS News, many pediatricians criticized the app, warning that weight-loss programs for children could lead to eating disorders. The company's latest earnings report, released Tuesday, showed that while revenue from its clinical business, including prescription drugs, had grown 57 percent year-on-year, its overall first-quarter revenue had declined by 10 percent; CBS News reports that this highlights the company's struggle to adapt to changing market conditions.

Weight Watchers' bankruptcy filing represents an attempt to adjust to a future where chemically induced weight loss has become increasingly prevalent, The Wall Street Journal reports, noting that the company has been offering drugs as a complement to its legacy business model but hasn't grown fast enough to offset declining subscriptions. The company's stock will be largely wiped out as the new ownership group takes control, though existing shareholders will retain that 9% stake under the restructuring plan that will cut its debt by approximately $1 billion. The Wall Street Journal explains that Weight Watchers has also struggled with the advent of free fitness apps and advice from social-media influencers, which have provided alternative channels for women seeking weight-loss guidance. 

WeightWatchers entered the clinical prescription business in 2023 by acquiring Sequence, a telehealth portal that enabled the company to offer weight-loss drugs to its members. However, the Wall Street Journal reports that former longtime WeightWatchers member Naomi Nemtzow expressed disappointment when the company abruptly stopped weekly meetings in her Brooklyn community in 2023, saying, "Basically, they gave up on the kind of work they had been doing and went on to selling Ozempic. 

They jumped on that bandwagon." CEO Comonte told the Wall Street Journal that community remains central to the company's brand and value proposition, acknowledging that "this part of the business has been neglected and needs some investment," while emphasizing that "the majority of our members do not want to be on these medications for life."